Contracting out for food services is an increasingly popular option for district. One company, Chartwells School Dining Services of Ada, works under contract in over 100 Michigan school districts.

The April 2003 issue of MEA Voice, the official magazine-style newsletter of the Michigan Education Association (MEA), was largely dedicated to refuting the idea that school districts can save money and/or improve quality, or both, by privatizing food, transportation, janitorial and/or other non-instructional school services.

While some articles highlighted examples in which “privateers” (the magazine’s term for private companies that provide services for schools) failed, others featured examples in which public employees “make a profit” without resorting to privatization.

The fact that poor-performing private companies have been fired – a point the MEA makes very clear – doesn’t prove that privatization doesn’t work. It proves that it does.

The universal conclusion, contrary to the experience of many school districts throughout Michigan, was that privatization is always a bad idea, never a viable option for schools seeking better service and budget savings.

While Michigan Privatization Report has always been a defender and advocate of privatization, our presentation of the issue has always contained counterbalancing caveats. For example: 1) Privatization carries the same risks and benefits businesses assume when they subcontract to outside firms; 2) Privatization of services without competitive bidding and proper monitoring can become fertile ground for political kickbacks and cronyism; etc. (see an entire issue of MPR devoted to “Privatization’s Pitfalls,” view the Spring 1997 issue).

The MEA Voice’s depiction of privatization, on the other hand, contains no such counterbalancing views that might challenge the reader to think on his or her own. A “Pro & Con” section offers one-sentence “pro” arguments framed by the anti-privatization authors themselves. Each of these straw men are then knocked over with at least three and sometimes seven anti-privatization arguments.

Overall, the authors of the publication seem either not to understand that their blanket condemnation contains a fundamental fallacy, or not to expect their readers to detect it. The fallacy of the MEA Voice’s position is that the failure of individual private-sector companies to fulfill their promises constitutes an argument against privatization per se. To offer such an argument, in article after article, misses practically the main point of the entire exercise, which is for school districts to be able to replace service providers that don’t do a good job.

Practically the whole reason privatization has taken hold, in addition to higher service quality and cost savings, is because schools don’t want to be locked into services that cost too much, do a poor job, or both. It’s extremely difficult — nearly impossible — to fire unionized school employees. Schools can much more easily fire a private company that doesn’t live up to its contract.

In short, the fact that poor-performing private companies have been fired — a point the MEA makes very clear — doesn’t prove that privatization doesn’t work. It proves that it does. It shows that with privatization, schools are no longer forced to pay exorbitant salaries to workers who do a poor job, as under the public-sector model. They can take action when school lunch or other services are poor, fire those responsible, and find someone who will do the job the way it’s supposed to be done. And if that one fails, they can hire another. And districts can take the money they save, if any, and put it back into the classroom where it belongs.

MEA
Praises

Profit-Making

in
Schools

(for
MEA Members)

The
April, 2003 MEA Voice was largely

dedicated
to denouncing privatization

and

is
sharply critical of profits, save for those

generated
by MEA members.

We have placed

several
comments side-by-side to highlight

inconsistencies
in the

publication’s arguments.

Words
in bold represent MPR’s emphasis.

MEA
Voice, on Profits for

Non-MEA
Members

MEA
Voice, on Profits for

MEA
Members

Page
12.Lu Battaglieri, MEA
President: “Private companies don’t care about our students or our
communities.They are in the
business for the money. They aim to turn a profit and that’s not
in the best interest of public education.”

Page
13.Dan Haske, MEA-ESP caucus
president:“It is time to put
an end to profit taking in the public school system.”“We need to focus our limited education dollars on our
children’s education.”

Page
14.Jennie Zubke, head cook
at Adrian High School:“We
had to guarantee to make a profit.”“If we failed to make a profit for the district, we would
not receive salary increases.We’d
either be making money, or we wouldn’t be getting raises.”

Page
15.Paul McBride, quoted by
the MEA Voice as a privatization expert:“‘They advertise a cost savings,’ McBride says of districts.
‘But, it’s really a cut in services.It’s a for-profit game.How
anyone thinks that you can provide the same service and save money for
the district and have a profit for the private company is just
amazing.It’s a sham.’”

Page
14.Karen Schulz, MEA Voice
author:“It was a risky
guarantee, but one that paid off for the district and the employees.In the first year, employees helped the district clear a profit of
more than $140,000.”

Editor’s Note: According to the
Adrian Board of Education’s agreement with its district food service
group, revenue exceeding $100,000 goes to district food service employees
in the form of “profit to be distributed.”

Page 16.In a section
entitled, “Your guide to fighting privatization”: “Know this – the
only reason private companies want a slice of your public school district
is to MAKE MONEY.” [Emphasis, MEA Voice]

Page 18.In an article entitled,
“Bus drivers go on offense,” Steve Spica, President of the Grand
Rapids Educational Support Personnel Association is quoted favorably,
saying, “Let’s say a boiler needs repair in another district’s
school building.Our members
could make those repairs for a lot less money than private contractors.It’s a win-win – the district with the bad boiler saves money
in the repair and we make some money for doing the work.”

That an increasing number of Michigan schools are taking advantage of the opportunity to do just that is evidenced, at least anecdotally, by requests for assistance to the Mackinac Center by district officials, and by reports from private, for-profit companies that provide noninstructional services to schools, such as food management. A steady increase in the number of schools outsourcing non-instructional services would not be taking place if the negative examples offered in the April MEA Voice were representative of privatization experiences in the state of Michigan.

There are other matters the authors of MEA Voice seem not to expect their readers to notice. For example, on numerous occasions the authors use the fact that “privateers” make a profit from their services to suggest contractors could hurt school districts. The argument put forward seems to be that because companies are trying to make a profit they cannot possibly care about a) doing a good job; b) the kids themselves; or c) both.

Yet, in another MEA Voice article featuring public workers who have taken over following the failure of a private company, the fact that these public workers “turned a profit” is offered as an example of success and good will. The April issue’s cover reads, “Adrian food service staff fight privatization by turning big profits for district.” According to the author, Adrian school district employees persuaded the district to end its relationship with a food contractor in favor of in-house staff on the promise that district employees would “guarantee to make a profit” off the kids. The district employees have reportedly done just that, generating $140,000 more than expenses, according to the union.

Under the Adrian deal, the unionized district employees are allowed to keep profits above $100,000 in the form of bonuses for themselves, or “profit” sharing. In other words, MEA-unionized school employees are being encouraged to take profits from the district — not-reinvesting them in the food service they are providing or in the classroom — just like the private contractors the MEA denounces.

Yet the profit motive is criticized by MEA officials in the same publication. Lu Battaglieri, MEA president, is quoted on page 12 of the April MEA Voice as saying, “Private companies don’t care about our students or our communities. They are in the business for the money. They aim to turn a profit and that’s not in the best interest of public education.”

The question that should occur to any attentive reader is: How can “making a profit” constitute an argument proving the perfidy of private companies, when it is offered as proof of success and good will when applied to public-sector workers? Why is it bad when private firms make a profit but good when district employees use public resources to do so? The April issue of MEA Voice contains several such contradictory statements; see the box on pg. 9 for more.

Of course, this is a classic example of a double standard. And double standards are usually indicative of some form of prejudice. In this case, the authors go to great lengths to show the evils profit making can inflict on a school, when they are inflicted by “privateers.” But when school employees make the profit, the character of profit-making changes from bad to good.

Hence, it isn’t profit-making per se that is the evil to be avoided, but private entrepreneurs and private enterprise.

But there is another point that eclipses the preceding ones in importance. It is the implication behind the fact that public-sector workers in Adrian or anywhere else would get together, make an offer to take back their food service, and do a better job than their private-sector counterparts.

Does anyone actually believe that these workers would have made the same offer had they not been faced with competition from the private sector — that one day they would have simply decided, “Hey, we’re going launch a campaign to do a better job?”

Again, the authors seem to expect readers to be unable to connect the dots: Even when public-sector workers perform at the efficiency and quality level of the private sector, it’s because they are facing competition from the private sector.

Thus, the prospect of privatization is imposing economic discipline where before there was none, spurring school districts to run their services more efficiently. Another way to put it is that the operating principle of privatization — competition — works, even when private sector companies aren’t providing the actual services.

Does all this mean privatization is a panacea for what ails school districts in financial trouble? Of course, not. Michigan Privatization Report would never make such a sweeping claim. But because the MEA Voice sees fit to issue such a sweeping condemnation, we do not recommend it for those seeking a balanced view on privatization._______________

Michael LaFaive is director of fiscal policy for the Mackinac Center for Public Policy and senior managing editor of Michigan Privatization Report.